Personal Insolvency Arrangements
The provisions in relation to personal insolvency arrangements parallel those for debt settlement arrangements. The principal difference is that the personal insolvency arrangement may make provision for secured creditors. A secured creditor may not participate in the debt settlement arrangement in relation to a secured debt.
Under personal insolvency arrangement, provision may be made for payment of both secured and unsecured debt over six years. The procedure is similar to that for debt settlement arrangements with special provisions dealing with secured creditors. A debtor may enter one personal insolvency arrangement only, in his lifetime.
The procedures for personal insolvency arrangements are broadly similar to those for a debt settlement arrangement. The personal insolvency practitioner plays a key role in administering certain aspects of the arrangement. He liaises with the Insolvency Service and monitors enforcement of the arrangement. The insolvency practitioner owes duties to the creditors as a whole and to the Insolvency Service.
A debtor who satisfies the eligibility criteria may make a proposal for a personal insolvency arrangement with one or more of its creditors with respect to the payment of his debts. The proposal must be made on behalf of the debtor by an insolvency practitioner in accordance with the legislation.
Joint and Related Proposals and Arrangements
Where two or more debtors are jointly party to all of the debts to be covered by a Personal Insolvency Arrangement, and each of those debtors satisfies the eligibility criteria specified, those debtors may jointly propose a Personal Insolvency Arrangement.
An arrangement may be proposed by a debtor on the basis that it is administered in common by a personal insolvency practitioner with one or other personal insolvency arrangements provided that they can be reasonably administered in common because of the financial relationship with the debtor.
The terms of each arrangement must specify
- how they are to operate including the treatment of joint and individual assets and joint and individual debts;
- whether the approval of one arrangement is contingent on the approval of the other;
- the effect of early termination of one on the other; and
- whether the successful completion of each is a condition of both.
The criteria for eligibility for a personal insolvency arrangement are broadly similar to those for s debt settlement arrangement. The conditions applicable to a debt settlement arrangement apply with certain additional conditions and features.
The debtor must be domiciled in the State, or within one year before the date of the application for a protective certificate, he has ordinarily resided in the State or had a place of business in the State. A least one of the creditors of the debtor must be a secured creditor holding security over an interest in property of the debtor situated in the State
The debtor must be insolvent. He must have completed a Prescribed Financial Statement and have made a statutory declaration confirming that the statement is a complete and accurate statement of the debtor’s assets, liabilities, income and expenditure.
There must be secured creditors who hold an interest in property of the debtor situated in the State whether real or personal property. The aggregate secured debt must be less than €3,000,000. Where all creditors who are secured creditors consent in writing, the €3,000,000 limit does not apply.
Confirmation of Mortgage Arrears Status
The debtor must make a declaration that he has cooperated for at least six months with the secured creditors in relation to his private residence in accordance with the Mortgage Arrears Resolution Process operated by them and
- notwithstanding such cooperation, he has been unable to agree an alternative repayment arrangement with the secured creditor;
- that he has entered into an alternative repayment arrangement and has, in good faith, endeavoured to comply with that arrangement.
Alternatively, the secured creditor may confirm in writing, its unwillingness to enter an alternative payment arrangement.
The personal insolvency practitioner must complete a statement in respect of the debtor, which confirms that the debtor has made the required declaration.
The requirements in respect of the mortgage arrears arrangements do not apply where the personal insolvency practitioner confirms that having regard to the circumstances, it is his belief that if the debtor was to enter an alternative repayment arrangement of the type operated by the secured creditor (approved by the Financial Regulator), the debtor would be unlikely to become solvent within five years.
The requirements may be waived by the Insolvency Service office where there are exceptional circumstances, substantially outside the control of the debtor which make it just to permit the debtor to make a personal insolvency arrangement.
Pre-Conditions re Other Insolvency Arrangements
The insolvency practitioner must issue a certificate to the effect, that having considered the debtor’s prescribed financial statement, he is of the opinion that there is no likelihood of the debtor becoming solvent within five years.
The debtor must not be
- an undischarged bankrupt;
- a discharged bankrupt subject to a bankruptcy payment order;
- a person who is a specified debtor as respects a Debt Relief Notice which is in effect;
- a person who, as a debtor, is subject to a Debt Settlement Arrangement which is in effect, or
- an arranging debtor under the Bankruptcy Act 1988;
Unless the debtor has, on notice to the Insolvency Service, made an application to the appropriate court and the court has made an order that it is satisfied that the current insolvency of the debtor arises by reason of exceptional circumstances or other factors which are substantially outside the control of the debtor and that it would be just to permit the debtor to make a proposal for a Personal Insolvency Arrangement, he must not
- have been the subject of a protective certificate issued less than 12 months prior to the date of the application for a further protective certificate;
- had his or her debts discharged pursuant to a final Debt Relief Notice less than 3 years prior to the date of the application for a protective certificate;
- had his or her debts discharged pursuant to a Debt Settlement Arrangement less than 5 years prior to the date of the application for a protective certificate, or
- been discharged from bankruptcy less than 5 years prior to the date of the application for a protective certificate.
A debtor is not eligible to make a proposal for a Personal Insolvency Arrangement where 25 percent or more of his or her debts (other than excluded debts) were incurred during the period of 6 months ending on the date on which an application is made for a protective certificate.
Excludable and Excluded Debts
An excludable debt in relation to a debtor means any:
- taxes, duty, levy or other charge of a similar nature owed or payable to the State;
- local property tax, NPPR, Household Charge or rates due to the local authority
- debt or liability of the debtor in respect of money advanced to the debtor under the Nursing Homes Support Scheme
- debt due by the debtor to any owners’ apartment management company in respect of annual and other service charges
- debt or liability of the debtor arising under the Social Welfare legislation
An excluded debt, in relation to a debtor, means any:
- liability of the debtor arising out of a domestic support order;
- liability of the debtor arising out of a damages award in respect of personal injuries or wrongful death arising from the tort of the debtor;
- debt or liability of the debtor arising from a loan (or forbearance of a loan) obtained through fraud, misappropriation, embezzlement or fraudulent breach of trust;
- debt or liability of the debtor arising by virtue of a court order made under the Proceeds of Crime Acts; or
- by virtue of a fine ordered to be paid by a court in respect of a criminal offence
Inclusion of Excludable Debt
An excludable debt shall be included in a proposal for a Personal Insolvency Arrangement only where the creditor concerned has consented or is deemed to have consented, to the inclusion of that debt in such a proposal. Where a personal insolvency practitioner proposes to include an excludable debt in a proposal for a Personal Insolvency Arrangement, he or she shall, without delay, notify the creditor concerned of that fact, which notification shall be accompanied by—
- such information about the debtor’s affairs (including his or her creditors, debts, liabilities, income and assets) as may be prescribed, and
- a request in writing that the creditor confirm in writing, whether or not the creditor consents, to the inclusion of the debt in a Personal Insolvency Arrangement.
A creditor shall comply with a request within 21 days of receipt of the notification. Where a creditor does not comply, the creditor is deemed to have consented to the inclusion of that debt in a proposal for a Personal Insolvency Arrangement.
Protective Certificate Application
The provisions in relation to the application for a protective certificate, are the same as those applying in relation to a debt settlement agreement. In addition, the borrower must furnish the above-mentioned declaration regarding the mortgage arrears process, unless the insolvency practitioner confirms that process would be futile.
The following are required in relation to the application
- statement of insolvency practitioner;
- statement of eligibility;
- completed prescribed financial statement;
- schedule of creditors;
- consent to disclosure of information; and
- authority to carry out verification checks.
An application may be withdrawn by the personal insolvency practitioner at any time prior to the issue of a protective certificate.
Where a personal insolvency practitioner becomes aware of any inaccuracy or omission in an application or any document accompanying such an application, he or she shall inform the Insolvency Service of this fact as soon as practicable, and the Insolvency Service shall have regard to any information provided for the purposes of its consideration of the application.
Statements and Requirements
The statement by the PIP is to confirm that
- the information contained in the debtor’s Prescribed Financial Statement is complete and accurate;
- the debtor is eligible under the above criteria to make a proposal for a Personal Insolvency Arrangement;
- having considered the Financial Statement completed by the debtor, there is no likelihood of the debtor becoming solvent within the period of 5 years commencing on the date on which the statement is made;
- having regard to the debtor’s circumstances as set out in the Prescribed Financial Statement, it is appropriate for the debtor to make a proposal for a Personal Insolvency Arrangement as there is a reasonable prospect that the debtor entering into such an arrangement would facilitate the debtor becoming solvent within a period of not more than 5 years
The debtor must sign a document confirming that he or she satisfies the eligibility criteria and make a statutory declaration in relation to his affairs and the status of his engagement with the mortgagee. The Prescribed Financial Statement must be lodged.
The schedule of creditors and the debts must state in relation to each such creditor the amount of each debt due to that creditor, whether, as respects the debt concerned, the creditor is a secured creditor and, if so, the nature of the security concerned, and such other information as may be prescribed;
The debtor’s written consent is required be given to the disclosure to, the processing by and disclosure by the Insolvency Service to creditors of the debtor concerned, of personal data of that debtor, to the extent necessary in respect of the Personal Insolvency Arrangement procedure and the debtor’s written consent to the making of any enquiry relating to the debtor by the Insolvency Service.
Insolvency Service Enquiries
The Insolvency Service may make enquiries regarding the accounts, assets, liabilities and income of the debtor. Enquiries made must be answered within 14 days. Where a debtor or personal insolvency practitioner fails to provide the information requested by the Insolvency Service) within 14 days or such longer period as the Insolvency Service may permit the application is deemed to be withdrawn.
The Service may address questions to public bodies, who must and are authorised to answer. It may make enquiries including the following
- particulars relating to bank accounts, securities or other accounts held, solely or jointly, by or for the benefit of the debtor with financial institutions or financial intermediaries in the State or abroad;
- particulars relating to assets of the debtor and the value of such assets;
- particulars of the liabilities of the debtor;
- the employment and income of the debtor;
- payments received by the debtor from the Department of Social Protection or other Departments of State or other State bodies or agencies and whether or not such payments are made as an agent of any other person;
- taxes or charges imposed by or under statute paid or owed by the debtor, whether within or outside the State and refunds in respect of such taxes and charges which are or may become due to the debtor.
The Insolvency Service is not obliged to make any particular enquiry. It may assume that the application is true and complete, the documents required to be lodged with the Insolvency Service have been so lodged and that it has no reason to believe that the information supplied in or in support of the application for a protective certificate is incomplete or inaccurate.
Court Application for Certificate by ISI
When it is satisfied that the application is an order, the Insolvency Service issues a certificate and furnishes it together with the supporting documentation to court. Where the court receives the application, it reviews eligibility and compliance with the criteria. If satisfied that the application is duly made, it issues the protective certificate and notifies the personal insolvency practitioner to that effect.
If it is not so satisfied, it shall notify the personal insolvency practitioner to that effect and request him or her, within 21 days from the date of the notification, to submit a revised application or to confirm that the application has been withdrawn.
Where the appropriate court receives the application for a protective certificate and accompanying documentation, it shall consider the application and documentation. If satisfied that the eligibility criteria have been satisfied and the other relevant requirements relating to an application for the issue of a protective certificate have been met, the court shall issue a protective certificate. If not so satisfied, the court shall refuse to issue a protective certificate.
The appropriate court, where it requires further information or evidence for the purpose of its arriving at a decision, may hold a hearing, which hearing shall be on notice to the Insolvency Service and the personal insolvency practitioner concerned.
The Protective Certificate
The protective certificate commences a 70-day period of protection. This may be extended by a further additional 40 days by the Court, where it is satisfied that the debtor and personal insolvency practitioner have acted in good faith, with reasonable expedition and that the personal insolvency arrangement is likely to be accepted by the creditors and completed by the debtor. Each of the creditors is to be notified of the protective certificate and notified of their right to apply to the court to annul it.
The protective certificate is registered with the Insolvency Service. Where a protective certificate is issued, the Insolvency Service shall record certain details in the Register of Protective Certificates,
The effect of the certificate is to create a moratorium on all enforcement. It prevents legal proceedings, enforcement and bankruptcy. Contact is not permitted with the debtor. Legal proceedings may be taken only with the consent of the court. Action may be taken against guarantors and persons jointly liable with the debtor, notwithstanding the moratorium.
Period of Protection
A protective certificate shall be in force for a period of 70 days from the date of its issue. Where a protective certificate has been issued, the appropriate court may, on application by the personal insolvency practitioner, extend the period of the protective certificate by an additional period not exceeding 40 days where—
- the debtor and the personal insolvency practitioner satisfy the court that they have acted in good faith and with reasonable expedition, and
- the court is satisfied that it is likely that a proposal for a Personal Insolvency Arrangement which is likely to be accepted by the creditors and to be successfully completed by the debtor, will be made if the extension is granted.
Where a protective certificate has been issued or extended the appropriate court may on application to that court extend the period of the protective certificate by a further additional period not exceeding 40 days where—
- the personal insolvency practitioner has been appointed
- the court is satisfied that the extension is necessary to enable the personal insolvency practitioner so appointed to perform his or her functions.
The above hearing shall be held with all due expedition. The period of a protective certificate may be extended once only.
Issue of Protective Certificate Notice and Appeal
On receipt of the decision of the court in relation to the issue of a protective certificate, the personal insolvency practitioner must notify each of the creditors specified in the schedule of creditors of that decision. In the case of a decision to issue a protective certificate, the notification by the personal insolvency practitioner shall contain a statement—
- that the debtor intends to make a proposal for a Personal Insolvency Arrangement, of the effect of the protective certificate, and
- of the right of the creditor to appeal the issue of the protective certificate.
The protective certificate shall specify the name of the debtor who is the subject of it, the debts (specified debts) which are subject to it, and the name of each creditor to whom a specified debt is owed and such other information as may be prescribed.
Aggrieved creditors may apply to the court for an order that the protective certificate should not apply to them. This must be done within 14 days. The court will not make the order revoking the protective certificate, unless failing to do so, would cause an irreparable loss for the creditor which would not otherwise occur and no other creditor to whom notice of the protective certificate has been given would be unfairly prejudiced. The court will have regard to the objectives of the legislation. The parties will bear their own costs unless to do so would cause an injustice.
Effect of Protective Certificate I
A creditor to whom notice of the issue of a protective certificate has been given shall not, whilst the protective certificate remains in force, in relation to a specified debt:
- initiate any legal proceedings;
- take any step to prosecute legal proceedings already initiated;
- take any step to secure or recover payment;
- execute or enforce a judgment or order of a court or tribunal against the debtor;
- take any step to enforce security held by the creditor in connection with the specified debt;
- take any step to recover goods in the possession or custody of the debtor, whether or not title to the goods is vested in the creditor;
- contact the debtor regarding payment of the specified debt, otherwise than at the request of the debtor;
An agreement with the debtor, including a security agreement, shall not by reason only that the debtor is insolvent or that the protective certificate has been issued be terminated or amended. An accelerated payment shall not be thereby permitted under that agreement.
Whilst a protective certificate remains in force, no bankruptcy petition relating to the debtor may be presented by a creditor in respect of a specified debt. In a case where the petition has been presented by such a creditor in respect of a specified debt, it may not be proceeded with.
Effect of Protective Certificate II
Whilst a protective certificate remains in force, no other proceedings and no execution or other legal process in respect of a specified debt may be commenced or continued by a creditor to whom it applies against the debtor or his or her property, except with the leave of the court and subject to any order the court may make to stay such proceedings, enforcement or execution for such period as the court deems appropriate pending the outcome of attempts to reach a Personal Insolvency Arrangement.
The fact that a protective certificate is in force in relation to a debtor does not operate to prevent a creditor taking the above actions in relation to another person who has guaranteed the debts of the debtor to which the protective certificate relates. The fact that a protective certificate is in force in relation to a debtor does not operate to prevent a creditor taking the above actions in relation to a person who has jointly contracted with the debtor or is jointly liable with the debtor to the creditor. That other person may sue or be sued in respect of the contract without joining the debtor.
In reckoning any period of time for the purpose of any applicable limitation period in relation to any proceedings or process above, (including any limitation period under the Statute of Limitations) the period in which the protective certificate concerned is in force shall be disregarded.
Post Protective Certificate
After the protective certificate is issued, the personal insolvency practitioner is to give notice to the creditors and invite them to make submissions regarding the debts concerned and the manner in which they may be dealt with as part of a personal insolvency arrangement. The insolvency practitioner must consider submissions made by the creditors regarding the debts and the manner in which they might be dealt with. This may include submissions in relation to previous or existing offers of arrangement and submissions made by secured creditors.
The personal insolvency practitioner shall make a proposal for a Personal Insolvency Arrangement in respect of the debts concerned. He may request a creditor to file a proof of debt, and the debt shall be proved in the same manner as a debt of a bankrupt is proved under the Bankruptcy Act. The creditor who does not do so is not entitled to vote or share in a distribution. There is provision for late filing of proof of the debt.
References and Sources
Burke & Comyn Personal Insolvency Law 2014
Bracken Practioner’s Personal Insolvency Handbook 2013
Law Society (Wright) Insolvency Law 2009
Sanfey & Holohan Bankruptcy Law & Practice2nd Ed 2010
Farry, Holohan Consolidated Bankruptcy & Personal Insolvency Legislation2013
Forde, Kennedy & Simms Company Insolvency 2015
Forde & Simms Bankruptcy Law 2nd Ed 2009
Insolvency Law and Practice (Report of the review committee chaired by Sir Kenneth Cork CBE, 1982, Cmnd 8558) (the Cork report)
V Finch, Corporate Insolvency Law: Perspectives and Principles 3rd Ed 2017
RM Goode, Principles of Corporate Insolvency Law (4th Ed, 2011)
A Keay and P Walton, Insolvency law: corporate and personal (4rd Ed, 2017)
Marsh Bankruptcy Insolvency and the Law 2016
WW McBryde, Bankruptcy 2nd Ed, 1995
Butterworths Insolvency Law Handbook 14th Ed 2012
Core Statutes on Insolvency Law and Corporate Rescue (annual editions)
Personal Insolvency Legislation
Personal Insolvency Act 2012
Personal Insolvency (Amendment) Act 2015
Personal Insolvency Act 2012 (Part 6) (Commencement) Order 2013, S.I. No. 14 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 2) Order 2013, S.I. No. 63 of 2013
Personal Insolvency Act 2012 (Establishment Day) Order 2013, S.I. No. 64 of 2013
Personal Insolvency Act 2012 (Authorisation and Supervision of Personal Insolvency Practitioners) Regulations 2013, S.I. No. 209 of 2013
Personal Insolvency Act 2012 (Authorisation of Approved Intermediaries) Regulations 2013, S.I. No. 216 of 2013
Personal Insolvency Act 2012 (Personal Insolvency Practitioner Authorisation and Renewal of Authorisation Prescribed Fees) Regulations 2013, S.I. No. 246 of 2013
Personal Insolvency Act 2012 (Accounts and Related Matters) Regulations 2013, S.I. No. 247 of 2013
Personal Insolvency Act 2012 (Commencement) (No. 3) Order 2013, S.I. No. 285 of 2013
Personal Insolvency Act 2012 (Value of interest in property) Regulations 2013, S.I. No. 330 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Personal Insolvency Arrangement Application Form) Regulations 2013, S.I. No. 331 of 2013
Personal Insolvency Act 2012 (Prescribed Protective Certificate Debt Settlement Arrangement Application Form) Regulations 2013, S.I. No. 332 of 2013
Personal Insolvency Act 2012 (Prescribed Debt Relief Notice Application Form) Regulations 2013, S.I. No. 333 of 2013
Personal Insolvency Act 2012 (Schedule of Creditors) Regulations 2013, S.I. No. 334 of 2013
Personal Insolvency Act 2012 (Procedures for the Conduct of Creditors’ Meetings) Regulations 2013, S.I. No. 335 of 2013
Personal Insolvency Act 2012 (Notification in relation to Excludable Debt) Regulations 2013, S.I. No. 337 of 2013
Personal Insolvency Act 2012 (Additional Information to be contained in the Registers) Regulations 2013, S.I. No. 356 of 2013
Personal Insolvency Act 2012 (Part 4) (Commencement) Order 2013, S.I. No. 462 of 2013
Personal Insolvency Act 2012 (Prescribed Fees in Bankruptcy Matters) Regulations 2013, S.I. No. 465 of 2013
Personal Insolvency Act 2012 (Prescribed Financial Statement) Regulations 2014, S.I. No. 259 of 2014
Personal Insolvency Act 2012 (Regulatory Disclosure Statement of a Personal Insolvency Practitioner) Regulations 2014, S.I. No.319 of 2014
Personal Insolvency Act 2012 (Written Statement Disclosing All of the Debtor’s Financial Affairs) Regulations 2015, S.I. No. 416 of 2015
Personal Insolvency Act 2012 (Prescribed Fees) Regulations 2015, S.I. No. 620 of 2015
Personal Insolvency Act 2012 (Renewal of Authorisation of Personal Insolvency Practitioners) Regulations 2016, S.I. No.226 of 2016
Justice Courts and Civil Law (Miscellaneous Provisions) Act 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part8) (Commencement) Order 2013, S.I. No. 286 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Part 7) (Commencement) Order 2013, S.I. No. 463 of 2013
Courts and Civil Law (Miscellaneous Provisions) Act 2013 (Section 2) (Commencement) Order 2014, S.I. No. 334 of 2014
Personal Insolvency (Amendment) Act 2015 (Commencement) Order 2015, S.I. No. 414 of 2015
Personal Insolvency (Amendment) Act 2015 (Commencement) (No. 2) Order 2015, S.I. No. 514 of 2015